Federal Signal Reports First Quarter Results Including 35% Net Sales Growth, 52% Operating Income Improvement, and Strong Cash Generation; Raises Full-Year Outlook and Increases EBITDA Margin Targets for Safety and Security Systems Group

Apr 29 2026 13:00 BST

DOWNERS GROVE, Ill. , April 29, 2026 /PRNewswire/ -- Federal Signal Corporation (NYSE:FSS) (the "Company"), a leader in environmental and safety solutions, today reported financial results for the first quarter ended March 31, 2026.

First Quarter Highlights

Net sales of $626 million, up $162 million, or 35%, from last year; organic growth of $70 million, or 15%
Operating income of $99.7 million, up $34.0 million, or 52%, from last year
GAAP Diluted EPS of $1.14, up $0.39, or 52%, from last year
Adjusted EPS of $1.18, up $0.42, or 55%, from last year
Orders of $623 million, up $55 million, or 10%, from last year
Operating cash flow of $101 million, up $65 million, or 176%, from last year
Raises 2026 net sales outlook to a new range of $2.57 billion to $2.66 billion, from the prior range of $2.55 billion to $2.65 billion
Raises 2026 adjusted EPS* outlook to a new range of $4.80 to $5.05, from the prior range of $4.50 to $4.80
Raises EBITDA margin targets for the Safety and Security Systems Group to a new range of 22% to 28%, from the prior range of 18% to 24%

Consolidated net sales for the first quarter were $626 million, an increase of $162 million, or 35%, compared to the prior-year quarter. Net income for the first quarter was $70.4 million, or $1.14 per diluted share, compared to $46.3 million, or $0.75 per diluted share, in the prior-year quarter.

The Company also reported adjusted net income for the first quarter of $72.7 million, or $1.18 per diluted share, compared to $47.0 million, or $0.76 per diluted share, in the prior-year quarter. The Company is reporting adjusted results to facilitate comparisons of underlying performance on a year-over-year basis. A reconciliation of these and other non-GAAP measures is provided at the conclusion of this news release.

First Quarter Outperformance Represents Strong Start to the Year; Raising EBITDA Margin Targets for the Safety and Security Systems Group

"Our first quarter results exceeded our expectations, with our businesses delivering 35% year-over-year net sales growth, 52% operating income improvement, and a 190-basis point increase in adjusted EBITDA margin," commented Jennifer L. Sherman, President and Chief Executive Officer. "Within our Environmental Solutions Group, we delivered 38% year-over-year net sales growth and a 46% increase in adjusted EBITDA. Production increases at several of our businesses, higher sales of our aftermarket offerings, proactive management of price/cost dynamics, and contributions from recent acquisitions were meaningful year-over-year growth drivers. Our Safety and Security Systems Group also delivered impressive results, with 22% top-line growth and an adjusted EBITDA margin of approximately 27%. With its consistently strong performance over the last several quarters, we are raising the EBITDA margin targets for our Safety and Security Systems Group to a new range of 22% to 28%, from the prior range of 18% to 24%."

In the Environmental Solutions Group, net sales for the first quarter were $533 million, up $145 million, or 38%, compared to the prior-year quarter. In the Safety and Security Systems Group, net sales were $93 million, up $17 million, or 22%, compared to the prior-year quarter.

Consolidated operating income for the first quarter was $99.7 million, up $34.0 million, or 52%, compared to the prior-year quarter. Consolidated operating margin for the first quarter was 15.9%, up from 14.2% in the prior-year quarter.

Consolidated adjusted earnings before interest, tax, depreciation and amortization ("adjusted EBITDA") for the first quarter was $126.3 million, up $41.2 million, or 48%, compared to the prior-year quarter, and consolidated adjusted EBITDA margin was 20.2%, up from 18.3% in the prior-year quarter.

In the Environmental Solutions Group, adjusted EBITDA for the first quarter was $113.3 million, up $35.8 million, or 46%, compared to the prior-year quarter, and its adjusted EBITDA margin was 21.3%, up from 20.0% last year. In the Safety and Security Systems Group, adjusted EBITDA for the first quarter was $24.7 million, up $7.9 million, or 47%, compared to the prior-year quarter, and its adjusted EBITDA margin was 26.6%, up from 22.0% last year.

Consolidated orders for the first quarter were $623 million, an increase of $55 million, or 10%, compared to the prior-year quarter. Consolidated backlog at March 31, 2026 was $1.04 billion, compared to $1.10 billion in the prior-year quarter.

Increased Operating Cash Flow Provides Flexibility to Fund M&A, Organic Growth Opportunities, and Cash Returns to Stockholders

Net cash provided by operating activities during the first quarter was $101 million, an increase of $65 million, or 176%, from the prior-year quarter.

At March 31, 2026, total outstanding debt was $552 million, total cash and cash equivalents were $71 million, and the Company had $939 million of availability for borrowings under its credit facility.

"Our operating cash flow generation during the quarter was up 176% compared to last year," said Sherman. "With the increased cash generation and available capacity under our credit facility, we have significant financial flexibility to invest in organic growth initiatives, pursue additional strategic acquisitions, pay down debt, and provide returns to stockholders through dividends and opportunistic stock repurchases."

The Company funded dividends of $9.2 million during the first quarter, reflecting an increased dividend of $0.15 per share, and recently announced a similar $0.15 per share dividend that will be payable in the second quarter of 2026.

Outlook

"Demand for our products and our aftermarket offerings remains strong," noted Sherman. "With our better-than-expected first quarter performance, our current backlog, and continued execution against our strategic initiatives, we are raising our full-year adjusted EPS* outlook to a new range of $4.80 to $5.05, from the prior range of $4.50 to $4.80. We are also increasing our full-year net sales outlook to a new range of between $2.57 billion and $2.66 billion, from the prior range of between $2.55 billion and $2.65 billion."

CONFERENCE CALL

Federal Signal will host its first quarter conference call on Wednesday, April 29, 2026 at 10:00 a.m. Eastern Time. The call will last approximately one hour. The call may be accessed over the internet through Federal Signal's website at www.federalsignal.com or by dialing phone number 1-877-704-4453 and entering the pin number 13760128. A replay will be available on Federal Signal's website shortly after the call.

About Federal Signal

Federal Signal Corporation (NYSE: FSS) builds and delivers equipment of unmatched quality that moves material, cleans infrastructure, and protects the communities where we work and live. Founded in 1901, Federal Signal is a leading global designer, manufacturer and supplier of products and total solutions that serve municipal, governmental, industrial, and commercial customers. Headquartered in Downers Grove, Ill., with manufacturing facilities worldwide, the Company operates two groups: Environmental Solutions and Safety and Security Systems. For more information on Federal Signal, visit: www.federalsignal.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

This release contains unaudited financial information and various forward-looking statements as of the date hereof and we undertake no obligation to update these forward-looking statements regardless of new developments or otherwise. Statements in this release that are not historical are forward-looking statements. Forward looking statements should not be relied upon as a predictor of actual results. Such statements are subject to various risks and uncertainties that could cause actual results to vary materially from those stated. Such risks and uncertainties include but are not limited to: economic and political uncertainty, risks and adverse economic effects associated with geopolitical conflicts including tariffs and other trade conflicts, legal and regulatory developments, foreign currency exchange rate changes, inflationary pressures, product and price competition, supply chain disruptions, availability and pricing of raw materials, interest rate changes, risks associated with acquisitions such as integration of operations and achieving anticipated revenue and cost benefits, work stoppages, increases in pension funding requirements, cybersecurity risks, increased legal expenses and litigation results, and other risks and uncertainties described in filings with the Securities and Exchange Commission.

* Adjusted earnings per share ("EPS") is a non-GAAP measure, which includes certain adjustments to reported GAAP net income and diluted EPS. In the three months ended March 31, 2026 and 2025, we made adjustments to exclude the impact of acquisition and integration-related expenses, net, and purchase accounting effects, where applicable. In prior years, we have also made adjustments to exclude the impact of pension-related charges, debt settlement charges, special tax items, and certain other unusual or non-recurring items. Should any similar items occur in the remainder of 2026, we would expect to exclude them from the determination of adjusted EPS. However, because of the underlying uncertainty in quantifying amounts which may not yet be known, a reconciliation of our Adjusted EPS outlook to the most applicable GAAP measure is excluded based on the unreasonable efforts exception in Item 10(e)(1)(i)(B).

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
	Three Months Ended March 31,
(in millions, except per share data)	2026	2025
Net sales	$ 625.6	$ 463.8
Cost of sales	446.2	333.0
Gross profit	179.4	130.8
Selling, engineering, general and administrative expenses	72.0	60.2
Amortization expense	6.5	4.3
Acquisition and integration-related expenses, net	1.2	0.6
Operating income	99.7	65.7
Interest expense, net	6.9	3.0
Other expense, net	0.6	0.7
Income before income taxes	92.2	62.0
Income tax expense	21.8	15.7
Net income	$ 70.4	$ 46.3
Earnings per share:
Basic	$ 1.16	$ 0.76
Diluted	$ 1.14	$ 0.75
Weighted average common shares outstanding:
Basic	60.9	61.1
Diluted	61.5	61.8
Cash dividends declared per common share	$ 0.15	$ 0.14

Operating data:
Operating margin	15.9 %	14.2 %
Adjusted EBITDA	$ 126.3	$ 85.1
Adjusted EBITDA margin	20.2 %	18.3 %
Total orders	$ 622.8	$ 567.9
Backlog	1,037.5	1,102.0
Depreciation and amortization	23.8	18.7

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
	March 31, 2026	December 31, 2025
(in millions, except per share data)	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$ 71.4	$ 63.7
Accounts receivable, net of allowances for doubtful accounts of $2.9 and $2.8, respectively	310.1	292.2
Inventories	477.8	471.6
Prepaid expenses and other current assets	17.5	26.3
Total current assets	876.8	853.8
Properties and equipment, net of accumulated depreciation of $215.1 and $208.0, respectively	287.2	274.6
Rental equipment, net of accumulated depreciation of $71.4 and $69.2, respectively	210.0	202.7
Operating lease right-of-use assets	29.9	28.4
Goodwill	626.8	619.8
Intangible assets, net of accumulated amortization of $110.3 and $104.2, respectively	393.9	382.9
Deferred tax assets	9.9	10.1
Deferred charges and other long-term assets	19.9	20.3
Total assets	$ 2,454.4	$ 2,392.6
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term borrowings and finance lease obligations	$ 3.0	$ 0.5
Accounts payable	115.8	98.0
Customer deposits	66.3	47.7
Accrued liabilities:
Compensation and withholding taxes	38.4	52.3
Current operating lease liabilities	8.1	7.9
Contingent consideration	4.1	15.0
Other current liabilities	72.5	61.0
Total current liabilities	308.2	282.4
Long-term borrowings and finance lease obligations	548.6	564.6
Long-term operating lease liabilities	23.1	21.6
Long-term pension and other post-retirement benefit liabilities	41.9	43.1
Deferred tax liabilities	74.2	71.9
Other long-term liabilities	23.9	27.0
Total liabilities	1,019.9	1,010.6
Stockholders' equity:
Common stock, $1 par value per share, 90.0 shares authorized, 71.0 and 70.8 shares issued, respectively	71.0	70.8
Capital in excess of par value	333.9	330.4
Retained earnings	1,376.5	1,315.3
Treasury stock, at cost, 10.0 and 9.9 shares, respectively	(272.5)	(263.5)
Accumulated other comprehensive loss	(74.4)	(71.0)
Total stockholders' equity	1,434.5	1,382.0
Total liabilities and stockholders' equity	$ 2,454.4	$ 2,392.6

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	Three Months Ended March 31,
(in millions)	2026	2025
Operating activities:
Net income	$ 70.4	$ 46.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	23.8	18.7
Stock-based compensation expense	2.7	2.4
Changes in fair value of contingent consideration	0.2	—
Payments for acquisition-related activity	(3.5)	—
Deferred income taxes	2.3	0.7
Changes in operating assets and liabilities	5.4	(31.4)
Net cash provided by operating activities	101.3	36.7
Investing activities:
Purchases of properties and equipment	(6.7)	(5.6)
Payments for acquisition-related activity, net of cash acquired	(44.9)	(82.1)
Net cash used for investing activities	(51.6)	(87.7)
Financing activities:
(Decrease) increase in revolving lines of credit, net	(12.8)	64.2
Purchases of treasury stock	—	(18.5)
Redemptions of common stock to satisfy withholding taxes related to stock-based compensation	(8.2)	(8.6)
Payments for acquisition-related activity	(11.5)	—
Cash dividends paid to stockholders	(9.2)	(8.6)
Proceeds from stock-based compensation activity	0.1	—
Other, net	(0.1)	(11.6)
Net cash (used for) provided by financing activities	(41.7)	16.9
Effects of foreign exchange rate changes on cash and cash equivalents	(0.3)	0.5
Increase (decrease) in cash and cash equivalents	7.7	(33.6)
Cash and cash equivalents at beginning of year	63.7	91.1
Cash and cash equivalents at end of period	$ 71.4	$ 57.5

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES GROUP RESULTS (Unaudited)

The following tables summarize group operating results as of and for the three months ended March 31, 2026 and 2025:

Environmental Solutions Group
	Three Months Ended March 31,
($ in millions)	2026	2025	Change
Net sales	$ 532.7	$ 387.4	$ 145.3
Operating income	89.1	59.7	29.4
Adjusted EBITDA	113.3	77.5	35.8
Operating data:
Operating margin	16.7 %	15.4 %	1.3 %
Adjusted EBITDA margin	21.3 %	20.0 %	1.3 %
Total orders	$ 534.3	$ 480.1	$ 54.2
Backlog	965.9	1,033.1	(67.2)
Depreciation and amortization	22.6	17.6	5.0

Safety and Security Systems Group
	Three Months Ended March 31,
($ in millions)	2026	2025	Change
Net sales	$ 92.9	$ 76.4	$ 16.5
Operating income	23.6	15.8	7.8
Adjusted EBITDA	24.7	16.8	7.9
Operating data:
Operating margin	25.4 %	20.7 %	4.7 %
Adjusted EBITDA margin	26.6 %	22.0 %	4.6 %
Total orders	$ 88.5	$ 87.8	$ 0.7
Backlog	71.6	68.9	2.7
Depreciation and amortization	1.1	1.0	0.1

Corporate Expenses

Corporate operating expenses were $13.0 million and $9.8 million for the three months ended March 31, 2026 and 2025, respectively.

SEC REGULATION G NON-GAAP RECONCILIATION

The financial measures presented below are unaudited and are not in accordance with U.S. generally accepted accounting principles ("GAAP"). The non-GAAP financial information presented herein should be considered supplemental to, and not a substitute for, or superior to, financial measures calculated in accordance with GAAP. The Company has provided this supplemental information to investors, analysts, and other interested parties to enable them to perform additional analyses of operating results, to illustrate the results of operations giving effect to the non-GAAP adjustments shown in the reconciliations below, and to provide an additional measure of performance which management considers in operating the business.

Adjusted Net Income and Earnings Per Share ("EPS"):

The Company believes that modifying its 2026 and 2025 net income and diluted EPS provides additional measures to assist it in comparing its performance on a consistent basis for purposes of business decision making by removing the impact of certain items that management believes are not representative of its underlying performance and to improve the comparability of results across reporting periods. Adjusted net income and Adjusted EPS are both non-GAAP measures. During the three months ended March 31, 2026 and 2025 adjustments were made to reported GAAP net income and diluted EPS to exclude the impact of acquisition and integration-related expenses, net, and purchase accounting effects, where applicable.

	Three Months Ended March 31,
(in millions)	2026	2025
Net income, as reported	$ 70.4	$ 46.3
Add:
Income tax expense	21.8	15.7
Income before income taxes	92.2	62.0
Add:
Acquisition and integration-related expenses, net	1.2	0.6
Purchase accounting effects ^(a)	1.8	0.3
Adjusted income before income taxes	95.2	62.9
Adjusted income tax expense ^(b)	(22.5)	(15.9)
Adjusted net income	$ 72.7	$ 47.0

	Three Months Ended March 31,
(dollars per diluted share)	2026	2025
EPS, as reported	$ 1.14	$ 0.75
Add:
Income tax expense	0.36	0.25
Income before income taxes	1.50	1.00
Add:
Acquisition and integration-related expenses, net	0.02	0.01
Purchase accounting effects ^(a)	0.03	0.01
Adjusted income before income taxes	1.55	1.02
Adjusted income tax expense ^(b)	(0.37)	(0.26)
Adjusted EPS	$ 1.18	$ 0.76

(a)

Purchase accounting effects in the three months ended March 31, 2026 and 2025 relate to adjustments to exclude the step-up in the valuation of inventory acquired in connection with acquisitions that was sold subsequent to the acquisition date and the depreciation of the step-up in the valuation of acquired rental equipment, where applicable. Such costs are included as a component of Cost of sales on the Condensed Consolidated Statements of Operations.

(b)

Adjusted income tax expense for the three months ended March 31, 2026 and 2025 was recomputed after excluding the tax impacts of acquisition and integration-related expenses, net, and purchase accounting effects.

Adjusted EBITDA and Adjusted EBITDA Margin:

The Company uses adjusted EBITDA and the ratio of adjusted EBITDA to net sales ("adjusted EBITDA margin"), at both the consolidated and segment level, as additional measures to assist in comparing its performance on a consistent basis for purposes of business decision making by removing the impact of certain items that management believes are not representative of its underlying performance and to improve the comparability of results across reporting periods. We believe that investors use versions of these metrics in a similar manner. For these reasons, the Company believes that adjusted EBITDA and adjusted EBITDA margin, at both the consolidated and segment level, are meaningful metrics to investors in evaluating the Company's underlying financial performance.

Consolidated adjusted EBITDA is a non-GAAP measure that represents the total of net income, interest expense, net, acquisition and integration-related expenses, net, purchase accounting effects, other expense, net, income tax expense, and depreciation and amortization expense, as applicable. Consolidated adjusted EBITDA margin is a non-GAAP measure that represents the total of net income, interest expense, net, acquisition and integration-related expenses, net, purchase accounting effects, other expense, net, income tax expense, and depreciation and amortization expense, as applicable, divided by net sales for the applicable period(s).

Segment adjusted EBITDA is a non-GAAP measure that represents the total of segment operating income, acquisition and integration-related expenses, net, purchase accounting effects, and depreciation and amortization expense, as applicable. Segment adjusted EBITDA margin is a non-GAAP measure that represents the total of segment operating income, acquisition and integration-related expenses, net, purchase accounting effects, and depreciation and amortization expense, as applicable, divided by segment net sales for the applicable period(s). Segment operating income includes all revenues, costs, and expenses directly related to the segment involved. In determining segment operating income, neither corporate nor interest expenses are included. Segment depreciation and amortization expense relates to those assets, both tangible and intangible, that are utilized by the respective segment.

Other companies may use different methods to calculate adjusted EBITDA and adjusted EBITDA margin.

Consolidated

The following table summarizes the Company's consolidated adjusted EBITDA and adjusted EBITDA margin and reconciles net income to consolidated adjusted EBITDA for the three months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
($ in millions)	2026	2025
Net income	$ 70.4	$ 46.3
Add:
Interest expense, net	6.9	3.0
Acquisition and integration-related expenses, net	1.2	0.6
Purchase accounting effects^*	1.6	0.1
Other expense, net	0.6	0.7
Income tax expense	21.8	15.7
Depreciation and amortization	23.8	18.7
Consolidated adjusted EBITDA	$ 126.3	$ 85.1

Net sales	$ 625.6	$ 463.8

Consolidated adjusted EBITDA margin	20.2 %	18.3 %

* Excludes purchase accounting expense effects included within depreciation and amortization of $0.2 million and $0.2 million for the three months ended March 31, 2026 and 2025, respectively.

Environmental Solutions Group

The following table summarizes the Environmental Solutions Group's adjusted EBITDA and adjusted EBITDA margin and reconciles operating income to adjusted EBITDA for the three months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
($ in millions)	2026	2025
Operating income	$ 89.1	$ 59.7
Add:
Acquisition and integration-related expenses, net	—	0.1
Purchase accounting effects^*	1.6	0.1
Depreciation and amortization	22.6	17.6
Adjusted EBITDA	$ 113.3	$ 77.5

Net sales	$ 532.7	$ 387.4

Adjusted EBITDA margin	21.3 %	20.0 %

* Excludes purchase accounting expense effects included within depreciation and amortization of $0.2 million and $0.2 million for the three months ended March 31, 2026 and 2025, respectively.

Safety and Security Systems Group

The following table summarizes the Safety and Security Systems Group's adjusted EBITDA and adjusted EBITDA margin and reconciles operating income to adjusted EBITDA for the three months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
($ in millions)	2026	2025
Operating income	$ 23.6	$ 15.8
Add:
Depreciation and amortization	1.1	1.0
Adjusted EBITDA	$ 24.7	$ 16.8

Net sales	$ 92.9	$ 76.4

Adjusted EBITDA margin	26.6 %	22.0 %

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SOURCE Federal Signal Corporation

Company Announcements

Federal Signal Reports First Quarter Results Including 35% Net Sales Growth, 52% Operating Income Improvement, and Strong Cash Generation; Raises Full-Year Outlook and Increases EBITDA Margin Targets for Safety and Security Systems Group